What is Division 293 Tax?
Division 293 tax is an extra tax for high-income earners in Australia. If your total income is over $250,000 in a financial year, you may pay an extra 15% tax on your concessional super contributions. Div. 293 tax is levied on the individual and not the super fund.
What Are Concessional Contributions?
These are payments made into your super fund before tax is taken out. They include:
- Employer contributions (like the super guarantee)
- Salary sacrifice contributions
- Personal contributions you claim as a tax deduction
For the 2024/25 and 2025/26 financial years, there’s a yearly limit of $30,000 for these contributions. If you have unused limits from the past five years, your cap could be higher. You can check your cap from your myGov account.
When Does Division 293 Tax Apply?
Division 293 tax applies when your total income for the financial year exceeds $250,000 and you have made concessional super contributions, resulting in an extra 15% tax on some of the contributions; if your concessional contributions exceed the cap, Division 293 tax does not apply to the excess amount, which is instead taxed at your marginal rate with a 15% offset.
What Counts as Income?
Income for Division 293 tax includes your:
- Taxable income
- Reportable fringe benefits
- Net investment and rental losses
- Amounts on which family trust distribution tax has been paid
- Your concessional contributions
One-off events such as a redundancy payment or a significant capital gains may increase your income above $250,000 in a particular year; note that some super withdrawals, like those from the First Home Super Saver Scheme, are not included in the Division 293 tax income calculation.
The following examples illustrate when Div. 293 tax may be payable.
Example 1
Sam earns a salary of $215,000 and her employer contributes $25,800 into her super for the financial year (12% SG). She has no other sources of income for Div. 293 purposes.
Div. 293 tax is payable on the lesser of:
▪ $240,800 − $250,000 = $0 (cannot be less than zero), and
▪ $25,800
Sam does not incur Div. 293 tax.
Example 2
Sam from Example 1 also earns $15,000 in investment income, taking her total income to $255,800.
Div. 293 tax is payable on the lesser of:
▪ $255,800 − $250,000 = $5,800, and
▪ $25,800
In this case, the first $20,000 in CCs is taxed at 15%, and the remaining $5,800 is taxed at 30% (including Div. 293 tax).
How Do You Pay Division 293 Tax?
The ATO checks your tax return and super fund reports. If you owe Division 293 tax, you’ll get a notice via myGov. You can pay:
- Directly to the ATO (BPAY, card, phone, myGov)
- By releasing money from your super (within 60 days of the notice)
Defined benefit fund members may have different rules. For details, visit ato.gov.au.
Can You Reduce Division 293 Tax through strategies?
There are no significant planning opportunities to prevent or reduce this tax. This is because a broad definition of income applies when determining your liability. Salary sacrificing more to super won’t help, because those contributions are also counted as income for Division 293 tax .
Is It Still Worth Making Concessional Contributions if I have to pay more tax?
Even with the extra tax, concessional contributions are taxed at a maximum of 30%. This is lower than the top tax rate of 47% for high income earners. You can still save up to 17% in tax by making these contributions, even if you pay the full Division 293 tax.
What Should You Do Next?
- Talk to your financial planner or tax agent for advice that fits your situation.
- Visit ato.gov.au for more information.
- If you would like personalised advice to see how we can help improve your overall financial position, please book an appointment here: Contact Ascent Wealth Solutions
Source:
This blog is based on information from the Australian Taxation Office (ato.gov.au) and technical guides current as at 6 May 2025. Some content is adapted from IOOF Service Co Pty Ltd adviser materials, copyright © IOOF Service Co Pty Ltd. All rights reserved.
General Advice Warning:
This information is of a general nature only and has been provided without taking into account your objectives, financial situation or needs. Because of this, you should consider whether the information is appropriate in light of your particular objectives, financial situation and needs. You should seek professional advice before acting on any information in this blog. The information reflects our understanding of legislation and ATO guidance as at the date of publication and may be subject to change. Examples are for illustration only and are not recommendations. No liability is accepted for any errors or omissions, or for any losses arising from reliance on this information.
Ascent Wealth Solutions Pty Ltd (ABN 38 685 677 141) is a Corporate Authorised Representative (No. 1314931) of Personal Financial Services Ltd (ABN 26 098 725 145). Australian Financial Services Licence (No 234459)
